The ACCC has taken Jetstar to court over misleading information about passengers’ refund rights. Picture: Brad HunterSource:News Corp Australia

Jetstar has been taken to court and could pay fines of almost $2 million for misleading customers about their rights to a refund.

The Australian Competition and Consumer Commission (ACCC) said Jetstar had admitted its website wrongly told passengers not all fares were refundable, and refunds were only available to passengers who bought more expensive tickets.

Under Australian consumer law, passengers whose flights are cancelled or significantly delayed due to reasons within the airline’s control are entitled to refunds.

“We worked closely with the ACCC as part of its review of Australian airlines’ terms and conditions and in July made changes to the wording on our website and added information about customers’ rights under the Australian Consumer Law when flights are delayed or cancelled.

“We also updated our terms and conditions to make it easier for customers to understand when they are eligible for a refund.”

Mr Evans said the airline was not obligated to refunds for change of mind.

“Like other low-fares airlines in Australia and around the world, customers who purchase our cheapest fares cannot get a refund if they decide they no longer wish to travel,” he said.

“For customers who are likely to change their mind or need flexibility, we have a number of fare types that give them that option.”

The ACCC and Jetstar have agreed to a $1.95 million penalty, which has been submitted to the Federal Court. The court will now decide on the appropriate penalty.

The watchdog has secured court-enforceable undertakings from Qantas, Virgin Australia and its subsidiary Tigerair, as well as Jetstar, to make sure their refund policies and practices complied with consumer law.

Jetstar said since July it has updated the wording of its terms and conditions to make passengers’ consumer rights clearer.

Airlines were obligated to offer refunds when there was a significant delay or cancellation due something under their control, finder.com.au’s insights manager Graham Cooke said.

“Cheaper fares have often been marked as not being refundable, when in reality customers are entitled to a refund if a delay or cancellation is due to an issue under the airline’s control,” Mr Cooke said.

“The ACCC rulings do not mean that every delay is covered. Circumstances which are outside of the airline’s control such as freak weather events and natural disasters don’t entitle you to a refund. This is where it’s best to check your travel insurance policy to see if you’re covered.”

Mr Cooke said generally, the more basic the airline, “the less compensation you’ll get.”

“Flight delays and cancellations are sometimes unavoidable for travellers, but you should never pay for a service if you’re not receiving it,” he said.

“Make sure you’re aware of your rights so you avoid any financial loss, and remember to always take out travel insurance to give you additional help if things do go wrong.”

Jetstar provides offers when a flight is delayed by more than three hours, or cancelled, due to causes within its control, such as engineering or staffing issues.

While weather events are not considered grounds for a refund, Jetstar said it has offered refunds in major incidents beyond its control, such as last year’s Bali ash cloud.